We find 2 better affects of Zakat:
1. Affect on production of wealth
2. Affect on distribution of wealth
Affect on production of wealth:
The affect of the Zakat on the production of wealth may be explained as under.
1. Higher cash.
Zakat discourages hoarding and people can use their cash to encourage savings, investment and capital formation in the country. Investment in various sectors of the economy as a result of output increases.
2. faster movement of money.
Zakat helps speed the money because the demand for goods and services increased. Increases the amount of investment, income and employment.
3. higher capital formation.
Zakat is paid on savings is accumulated at least one year. Therefore reduces the absolute level of savings of a person. Their consumption levels, it is an irritant to the amount of savings increased. raises marginal savings used for capital additions in the country. This will undoubtedly promote the level of production in the economy.
4. More efficiency.
Since then, demand Zakat overall increase in consumer goods, consumption as a function of the community can be moved up in a macro sense. the economy would become more efficient.
Affect on distribution of wealth:
The affect of the Zakat on the distribution of wealth may be explained as under.
1. Automatic and equitable distribution.
2.5% of the wealth transfer from the rich to the poor each year in the form of zakat. That is, the wealth of the rich to transfer the poor community in the forties. This provides an automatic mechanism for the flow of wealth from rich to poor, because the fair sharing of wealth between the various sectors of society.
2. A better distribution of resources.
Money from rich to poor in the form of Zakat means that demand may increase according to the necessities of life. This is the production. The scarcity of resources has to go from the production of luxury goods. This is a better allocation and distribution of scarce resources.
The construction of social protection institutions with funds from zakat, to ensure equity in the economy.
4. Better standard of living.
Zakat is the highest quality of life for the poor in the process of redistribution of income.
5. In addition to the distribution of wealth.
Zakat restricts the ratio of wealth density in some hands.